oversight

FY 2014 Audit of FCA's Financial Statements

Published by the Farm Credit Administration, Office of Inspector General on 2014-11-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

    Office of
 
    Inspector General
 
 
 
 
 
 
 
 
 
 
 
            Audit of FCA’s Financial Statements
                               Fiscal Year 2014
 
 
 
 
 


 
                                  A-14-FS
 
 




 
 
                                  November 2014
 

    TABLE OF CONTENTS
 
 
 
    Inspector General’s Transmittal Letter of the Auditor’s Report………………………………………1

    Auditor’s Opinion Letter on the Financial Statements....…………………………………...………...3




    For the financial statements and related notes to each fiscal year’s financial audit reports,
    refer to FCA’s Performance and Accountability Report (PAR) for that year. The PARs can
    be found on FCA’ s website.
    Farm Credit Administration                                        Office of Inspector General
                                                                     1501 Farm Credit Drive
                                                                      McLean, VA 22102-
                                                                      5090 (703) 883-4030
 
 
 
 
 
 
    November 13, 2014
 
 
 
    The Honorable Jill Long Thompson, Board Chair
    The Honorable Kenneth A. Spearman, Board Member
    The Honorable Leland A. Strom, Board Member
    Farm Credit Administration
    1501 Farm Credit Drive
    McLean, Virginia 22102-5090
 
    Dear Board Chair Long Thompson and FCA Board Members Spearman and Strom:
 
    The report on the audit of the Farm Credit Administration’s (FCA’s or Agency’s) financial
    statements for the fiscal year (FY) ended September 30, 2014 is attached. The Office of
    Inspector General (OIG) contracted with Harper, Rains, Knight & Company, P.A., an
    independent public accounting firm, to perform the audit.
 
    Harper, Rains, Knight & Company issued an unmodified opinion on the Agency’s financial
    statements. In the auditor’s opinion, FCA’s principal financial statements present fairly, in all
    material respects, the financial position of the Agency as of the FY ended September 30, 2014,
    in conformity with generally accepted accounting principles.
 
    Harper, Rains, Knight & Company considered FCA’s internal control over financial reporting to
    determine the audit procedures for the purpose of expressing an opinion on the financial
    statements. Although they did not express an opinion on the effectiveness of FCA’s internal
    controls, they did not identify any deficiencies considered to be a material weakness.
 
    Additionally, Harper, Rains, Knight & Company performed tests of FCA’s compliance with
    selected provisions of laws and regulations that could have a direct and material effect on the
    financial statements. Although they did not express an opinion on compliance with those
    provisions, they did not identify any instances of noncompliance or other matters required to be
    reported under Government Auditing Standards issued by the Comptroller General of the United
    States or the Office of Management and Budget (OMB) Bulletin No. 14-02, Audit Requirements
    for Federal Financial Statements.
 
    Harper, Rains, Knight & Company was required to perform the audit in accordance with
    Government Auditing Standards and OMB Bulletin No. 14-02. To ensure the quality of the work
    performed, the OIG:

             reviewed Harper, Rains, Knight & Company approach to and planning of the audit,
             evaluated the qualifications and independence of the auditors,



                                                    1


 
             attended key meeting with auditors and Agency officials,
             monitored the progress of the audit,
             examined workpapers, and
             reviewed the audit reports.

    Harper, Rains, Knight & Company is responsible for the attached auditor’s report and the
    conclusions expressed in the report. The OIG is responsible for technical and administrative
    oversight regarding the audit firm’s performance under the terms of the contract. Our review
    was not intended to enable us to express, and accordingly we do not express an opinion on the
    Agency’s financial statements or conclusions on internal control over financial reporting and
    compliance with laws and regulations, including whether the Agency’s financial management
    systems substantially complied with the Federal Financial Management Improvement Act.
    However, our monitoring review disclosed no instances in which Harper, Rains, Knight &
    Company did not comply, in all material respects, with the auditing standards.


    Respectfully,



    Elizabeth M. Dean
    Inspector General




                                                   2


 
 
                                             Independent Auditors’ Report
 
    The Board and Inspector General
    Farm Credit Administration
 
    Report on the Financial Statements
 
    We have audited the accompanying balance sheet of the Farm Credit Administration (FCA), as of
    September 30, 2014, and the related statements of net cost and changes in net position, and combined
    statements of budgetary resources, for the fiscal year then ended and the related notes to the financial
    statements.
 
    Management’s Responsibility for the Financial Statements
 
    Management is responsible for the preparation and fair presentation of these financial statements in
    accordance with general accepted accounting principles in the United States of America; this includes
    the design, implementation, and maintenance of internal control relevant to the preparation and fair
    presentation of financial statements that are free from material misstatement, whether due to fraud or
    error.
 
    Auditors’ Responsibility
 
    Our responsibility is to express an opinion on these financial statements based on our audit. We
    conducted our audit in accordance with auditing standards generally accepted in the United States of
    America; the standards applicable to financial audit contained in Government Auditing Standards issued
    by the Comptroller General of the United States; and Office of Management and Budget (OMB)
    Bulletin No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB
    Bulletin No. 14-02 require that we plan and perform the audit to obtain reasonable assurance about
    whether the financial statements are free from material misstatement.
 
    An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
    the financial statements. The procedures selected depend on the auditors’ judgment, including the
    assessment of the risks of material misstatement of the financial statements, whether due to fraud or
    error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
    preparation and fair presentation of the financial statements in order to design audit procedures that are
    appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
    the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
    the appropriateness of accounting policies used and the reasonableness of significant accounting
    estimates made by management, as well as evaluating the overall presentation of the financial
    statements.
 
    We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
    our audit opinion.
                            Harper, Rains, Knight & Company, P.A. • Certified Public Accountants • Consultants

                                        700 12th Street, NW, Suite 700 • Washington, DC 20005

                                Telephone 202.558.5167 • Facsimile 601.605.0733 • www.hrkcpa.com 


 
                                                                    3

  The Board and Inspector General
    Farm Credit Administration – Continued
 
    Opinion on the Financial Statements
 
    In our opinion, the financial statements including the accompanying notes, present fairly, in all material
    respects, the financial position of FCA as of September 30, 2014, and its net cost of operations, changes
    in net position, and budgetary resources for the fiscal year then ended, in conformity with accounting
    principles generally accepted in the United States of America.
 
    Other Matters
 
    The financial statements of FCA as of September 30, 2013, were audited by other auditors whose report,
    dated November 6, 2013, expressed an unmodified opinion on those statements.
 
    Required Supplementary Information
 
    Generally accepted accounting principles in the United States of America require that the information in
    the Management’s Discussion and Analysis, and Required Supplementary Information sections be
    presented to supplement the basic financial statements. Such information, although not a part of the
    basic financial statements, is required by the Federal Accounting Standards Advisory Board who
    considers it to be an essential part of financial reporting for placing the basic financial statements in an
    appropriate operational, economic, or historical context. We have applied certain limited procedures to
    the required supplementary information in accordance with auditing standards generally accepted in the
    United States of America, which consisted of inquiries of management about the methods of preparing
    the information and comparing the information for consistency with management’s responses to our
    inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
    financial statements. We do not express an opinion or provide any assurance on the information because
    the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
    assurance.
 
    Other Information
 
    Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a
    whole. The information in the Statement of the Board Chair and Chief Executive Officer (CEO), Letter
    from the Chief Financial Officer, and Other Information section is presented for purposes of additional
    analysis and is not a required part of the basic financial statements. Such information has not been
    subjected to the auditing procedures applied in the audit of the basic financial statements, and
    accordingly, we do not express an opinion or provide any assurance on it.
 
    Other Reporting Required by Government Auditing Standards
    Internal Control over Financial Reporting
 
    In planning and performing our audit of the financial statements, we considered FCA’s internal control
    over financial reporting (internal control) to determine the audit procedures that are appropriate in the
    circumstances for the purpose of expressing our opinion on the financial statements, but not for the
    purpose of expressing an opinion on the effectiveness of FCA’s internal control. Accordingly, we do not
    express an opinion on the effectiveness of FCA’s internal control. We did not test all internal controls
    relevant to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of
    1982.




 
                                                         4

  The Board and Inspector General
    Farm Credit Administration – Continued
 
    A deficiency in internal control exists when the design or operation of a control does not allow
    management or employees, in the normal course of performing their assigned functions, to prevent, or
    detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
    combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
    misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a
    timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
    that is less severe than a material weakness, yet important enough to merit attention by those charged
    with governance.
 
    Our consideration of internal control was for the limited purpose described in the first paragraph of this
    section and was not designed to identify all deficiencies in internal control that might be material
    weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies
    may exist that were not identified. Given these limitations, during our audit we did not identify any
    deficiencies in internal control that we consider to be material weaknesses.
 
    Compliance and Other Matters
 
    As part of obtaining reasonable assurance about whether FCA’s financial statements are free from
    material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
    contracts, and grant agreements, noncompliance with which could have a direct and material effect on
    the determination of financial statement amounts, and certain provisions of other laws and regulations
    specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with those
    provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
    results of our tests of compliance disclosed no instances of noncompliance or other matters that are
    required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02.
 
    Purpose of the Other Reporting Required by Government Auditing Standards
 
    The purpose of the communication described in the Other Reporting Required by Government Auditing
    Standards section is solely to describe the scope of our testing of internal control and compliance and
    the result of that testing, and not to provide an opinion on the effectiveness of FCA’s internal control or
    compliance. Accordingly, this communication is not suitable for any other purpose.
 
 
 
 



 
    November 13, 2014




 
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